Publishers On Publishing

by Nitasha Devasar

  them appropriately.

  sumeet gupta is Senior Director, FICCI where he heads Publishing, Homeland Security, Private Security, and Geospatial Technologies. He has over 19 years of experience in domains including science and technology, security, media and publishing. He was instrumental in creating the first international animation awards in India, and worked a report that formed the backbone of the

  second phase of FM radio privatization in India. 25

  taX anD ComPlIanCe envIronment “keeping books affordable for all – difficult with gst!” Sanjiv Gupta

  Books are considered to be our main source of knowledge. India, as a developing country has always aimed to develop skillsets to spread knowledge and readership across the country (at accessible costs?) in order to reach more people.To enable us to keep books at more accessible price points, books have always been kept out of the tax arena. Books have traditionally been exempt from sales tax or service tax, and the same was expected under the new Goods and Services Tax (GST) act.

  How is the price of a book determined?

  To provide some context: prices of books are determined by several factors including sales volumes, printing and design costs, design royalties, and inventory obsolescence.After implementation of GST, costs are going to increase since GST will be levied on royalties and printing costs at an abnormally high rate of 12 per cent.As GST is not charged on sale of books, publishers cannot claim input tax credit (ITC).This increase in cost will likely lead to publishers increasing prices of books.

  The GST’s objective was to keep cost neutral.The costs of books will rise under the new scenario.

  To increase readership and share knowledge, we need to keep the prices of books affordable.The government can play a pivotal role by not taxing royalties and printing services. It would result in keeping the prices of books in an affordable price range.

  Credit period: Another challenge

  Book publishers have to provide long credit period to their distributors/

  126 tax and compliance environment customers, hold large inventory for a long period, and struggle to keep prices of books low to ensure affordability.As our credit period is the longest compared to any other industry, the entire value chain works on publishers funding, until the time the reader buys the book.

  For most businesses, the credit period is usually thirty days and sometimes payments are received in advance before supplies are made. Not so in publishing: we have the highest credit period anyone can imagine. Such a long credit period was set historically many years ago when there was not significant local publishing. Books were shipped into India by sea, and the time taken to bring them to India was more than ninety days and hence credit period was what it was.

  Other overheads…

  Now, with digitization and upgradation of technology combined with simplification of import regulations, books by international authors are released at the same time as they are being released internationally. Book publishers can also print international titles locally under the exportprocessing zone.The publishers are burdened with high cash servicing cost since payments to printers are made prior to collection of payment from distributors.

  How Penguin Random House tackles this

  The physical inventory warehouse for Penguin Random House India is based in Dasna, Uttar Pradesh. It is a 140,000 sq. ft facility with stateof-the-art infrastructure and processes.This facility is the best warehouse in the country: zero dust and with efficient delivery mechanism—order to shipment in 24–48 hours.We carry approximately 3 million units at any given point to service our distributors.The inventory turnover is approximately three times.

  We at Penguin Random House India are devising new ways of managing inventories.We have implemented the ‘One Book Model’ for a significant number of titles from our local list. Hence no book goes out of print—we can print one copy of a book in 48 hours and deliver

  it to the reader in paperback.This is undertaken at Repro Knowledge

  sanjiv gupta 127 Cast Limited in Mumbai at its state-of-the-art facility.We have a similar arrangement with Ingram for international customers—a book can now be ordered, printed and delivered internationally in a short time.

  But we are facing challenges under the GST, for us to send free copies of our books for review to authors, media, etc. Every copy of a book shipped, whether free or otherwise, needs to have an invoice.This is adding to the paperwork and becomes inefficient for the industry.

  Piracy: another menace

  The challenges of piracy are widespread—pirated books are available at every traffic light, key markets in all the metros and multiple other places. A publisher launches a hardback title and a paperback on cheap paper is available on the roadside.The publisher loses out on sale/margin, authors on royalty and the ‘piracy vendor’ laughs all the way to the bank.

  However, at the end of the day, all the challenges we face fade away when we get appreciation for our books from readers.And that is what keeps us going.

  sanjiv gupta is Chief Operating Officer, Penguin Random House India. He manages finance and operations for the company and has over 25 years of experience across a spectrum of industries. Before joining Penguin in 2011 as Finance Director, Sanjiv was Director at Masonite Doors and was leading operations in India. He has previously worked with Hines India Real Estate, Bharti Group, Honeywell International, Honda Cars and

  DCM in various roles.

  26 key faCets of CoPyrIght toDay “Changes, conflicts and challenges” Michael Healy

  When did copyright become such a hot topic? For most of my career in publishing, it was talked about rarely.When it was discussed, it seemed to be the preoccupation of lawyers and academics. Everyone was aware of infringement and vigilant to the most egregious expressions of it, but for the most part senior leaders in publishing didn’t have to think about it much, if at all. Copyright was one of those essential and immovable foundation stones on which the industry stood: safe, secure, dependable. Those comfortable days are far behind us and are not returning.The foundation has been shaking for several years and continues to do so. Everyone knows why.A global, ubiquitous content network, accessible every moment, has facilitated sharing to a degree unimaginable previously. Co-workers, students and teachers, friends and families now share content with ease and with little regard to the legality of the simple practices that technology has enabled.With technological transformation has come cultural change.The ‘content demands to be free’ mantra is a popular one among consumers, and it has powerful supporters in big tech companies and some governments. In quite a short time, copyright has come to be seen by many outside the publishing industry as an inhibitor to creativity and innovation instead of the enabler and protector it once was. Even many of those supportive of copyright, those who think that it’s an important tool for encouraging writers to write and publishers to publish, say that it requires reform to keep pace with changing technology and social expectations and that existing licensing

  mechanisms are cumbersome and inefficient. Although these are global phenomena, it’s true to say that the consequent disruption to the publishing industry has been felt more intensely and for a longer period of time in some countries than others. Canada stands out in this regard.The late actor and comedian Robin Williams famously (and rudely) likened Canada to ‘a loft apartment over a really great party’.The implication was obvious.All the action was in the US, while Canada was a place where very little happened. In the world of copyright, nothing could be further from the truth. For the past several years, Canada has been the front line in the world’s ‘copyright wars’, a place of seemingly endless and very public confrontation. It’s important to understand how this happened because it holds lessons for every country, including India.

  Canada became the first major copyright battleground in recent years, the front line where rights-holders and educators fought so bitterly, and the focus for so many other countries considering the future of copyright. It started for most peopl
e with the Copyright Modernization Act, a piece of legislation introduced by the Canadian government in 2012 and widely interpreted by educators as allowing them to use copyrighted content without seeking permission from, or paying, the rights holders. Publishers and authors cried foul immediately.The legislation, and a series of subsequent judgements from the Supreme Court of Canada, were seen as devastating to their business interests and very damaging to Canada’s wider cultural industries. Some publishing companies closed down entirely. Others reduced their output or diverted resources away from educational titles. Some US publishers pulled back, shuttering their Canadian operations.They, along with many commentators, complained that the pendulum had swung too far, that the essential and delicate balance between incentivizing and rewarding rights holders on the one hand, and making content accessible and affordable for Canada’s teachers and students on the other, had been broken. Estimates of the loss to rights holders were put as high as $50 million per year.

  Five years later and the battles are still raging on many fronts. In

  2017, the Reproduction Rights Organization in French-speaking Canada, Copibec, publicized its class action lawsuit against Université Laval, alleging that the university ‘infringed the patrimonial and moral rights recognized under the Copyright Act’. The class action, authorized by The Québec Court of Appeal in February, was filed on behalf of ‘all authors and publishers from Québec, the rest of Canada, and other countries’. Copibec’s equivalent in Anglophone Canada,Access Copyright, has had its own litigation battles going back several years, most notably with York University.

  But the significance of what happens in Canada extends far beyond its borders and the noisy debate reverberates around the world. That’s why a worldwide audience is watching what happens next. The 2012 legislation has to some extent been the basis of proposals for new copyright laws in other countries, notably South Africa and Australia, provoking fears among many rights holders that anti-copyright sentiments—what they call ‘the Canadian flu’—might be infecting other jurisdictions. In Australia, rights holders and their representatives have been fighting proposals by the country’s Productivity Commission to introduce a US-style fair use exception into its copyright law. Publishers, authors and other creators were relieved by the news late in 2017 that the Australian government had merely taken note of the recommendation and would begin a new round of public consultation on copyright exceptions in 2018.The very high-profile campaign mounted in Australia by its creative industries may have helped publishers and authors ‘dodge the bullet’ on this occasion, but no one there is complacent about the final outcome.

  India itself is no stranger to the ‘copyright wars’ being waged between content owners and educational institutions. In March 2017, three international publishers, Oxford University Press, Cambridge University Press and Taylor & Francis withdrew from a long-standing and highly contentious litigation with Delhi University that centred on copying copyrighted content for course packs.The highly publicized dispute saw reprised in India many of the confrontations and distortions familiar from other battles in other jurisdictions; authors and publishers on one side, teachers and university administrators

  on the other. It’s difficult for authors and publishers surveying the copyright world today to find much solace.Wherever you look—whether it’s in India, Germany, Belgium or Brazil—you can find evidence of judicial decisions profoundly hostile to the interests of content creators. Decisions, for example, that offer no protection against systematic and unremunerated copying of educational and scholarly content; decisions that refuse to recognize publishers as legitimate rights holders for the purposes of receiving monies from copying levies; new laws and regulations that have the effect of widening the exceptions to and limitations on copyright.The news is by no means all bad for the publishing industry, but there are more than enough discouraging signs for publishers and authors.The good news is that the industry is more alert to the problems than ever before. Awareness has increased and with it the realization that copyright is critically important, not just for the health and prosperity of publishing companies but for the wider creative industries on which so many economies depend more and more for jobs and exports.With awareness has come effective action. Individual companies and trade associations have stood up, shown real leadership, and fought for their own and the wider industry’s interests, committing significant time and money in the process.That leadership and commitment deserves to be acknowledged and applauded, but there’s much more that needs to be done.

  The industry needs to come together to invest as a matter of urgency in a sustained, international programme of copyright education to inform and educate users about the value of copyright and about their rights and responsibilities in regard to the content they consume. Copyright infringement is not a victimless crime and users, made aware, can be brought to an understanding that high-quality content, whether it’s for education, research, professional advancement or entertainment, requires substantial long-term investment. But we need to do more than inform and educate.We have to learn from other sectors, such as music and video, and make it easier for everyone to buy and license the content they want.We need to put in place easy-to-find, simple-to-use tools that

  deliver content in the workplace, in the classroom, in the library, and in the home in exactly the forms that consumers demand.The challenge facing publishers and authors is to make it as easy to buy and license as it is to infringe. Informed and aware consumers, global content networks, and ubiquitous licensing services: that’s the future towards which the publishing industry should be working.

  michael healy is Executive Director (International Relations) at the Copyright Clearance Centre (CCC). Prior to joining CCC, he was Executive Director of the Book Rights Registry. He has also worked for more than 20 years in UK’s publishing industry. Michael has been closely involved in developing standards for the international book trade and has been Chairman of the International ISBN Agency. He currently chairs the International Standard Name Identifier (ISNI) Agency

  and is a director of the UK Copyright Hub. 27

  legal asPeCts of CoPyrIght

  “there is lack of awareness of the importance of copyright” Saikrishna Rajagopal

  Q:What is the role of copyright for the publishing industry in India? Saikrishna: Copyright is, of course, critically important to the publishing industry since its business models are based on being able to protect the content it publishes from being copied and used without permission by those who do not invest in creating it. Publishers act as de facto promulgators of both culture and education in many ways through their publications, and they are able to effectively fulfil this function only when they are supported by a robust legal framework which, in theory, acknowledges their exclusive rights in the content they publish, and by enforcement mechanisms through which their rights are protected in practice on the ground.

  Without both such substantive and positive protection, which copyright provides, it would be challenging for publishers even to contemplate being able to protect their content.Without copyright protection, their content could become freely available for anyone to use and exploit.While there are sections of society which may cheer such a development, especially if free use were by the readers of books, the fact of the matter is that, without effective copyright protection in place, untrammelled and unregulated exploitation of content would not just be by the isolated reader seeking knowledge. It would also be by the unscrupulous middleman seeking to exploit the investment by another to make commercial gains for himself through the mass production and sale of content without reference to and, certainly, without the permission of the content creator.

  Although the case of unjust commercial enrichment is a far greater

  concern than that of the lone individual who makes limited use of content without authorization, both cases chip away at a model where publishers use copyright, and the gains they make through copyright are invested in the creation of f
urther content, which in turn contributes to the enhancement of both cultural and academic spheres of public life.

  Q: How is the situation in India different from elsewhere? Saikrishna: A lot of the content which is made available in the country is reprinted from publications abroad at special, lower prices for India.This is true not just of academic content for which special editions for the Indian subcontinent may be published through licensing arrangements but also of general fiction which is often available in India at prices which are much lower than those at which the same books are sold in the West.Thus, while the content available in India may not significantly differ from the content available elsewhere, publishers have ensured that prices often differ in order to make content accessible to people in India keeping in mind the purchasing power and per capita income of Indians.

  Although doing so certainly makes good business sense, it also functions as a public service. In such a scenario, copyright becomes more important than ever since it is important that publishers are able to contain copies meant for sale in India, and ensure that they are not sold without authorization beyond the country’s borders. If that were to happen, it would cause tremendous losses to publishers as the price points in the West are higher.

  It is with reference to this territorial differentiation of rights that the Indian scenario significantly differs. Q: Can you tell us about a few key judgements globally that have influenced the way copyright is viewed and used?

  Saikrishna: Copyright as we know it is a few hundred years old.Although the copyright traditions of continental Europe are more author-centric than those of England and other common law jurisdictions, they are not incompatible with each other. Having been a British colony, we unsurprisingly follow the traditions of English law although, in recent